If I received overpayment but didn’t pay it back yet how do I report that on my taxes?

It would depend on what the overpayment was for, can you clarify please?

Overpayment of what?

When you pay back income that you received, you report the repayment in the year that you actually pay it back. So if you have not yet paid it back, you have nothing to report on your 2022 tax return. If you repay more than $3,000 in 2023 you will report that on your 2023 tax return. If you repay $3,000 or less there is no tax adjustment, so you don't report the repayment at all.

If you receive an overpayment and pay it back in the same year, you reduce the amount of income you report by the amount you repaid, so you report only the amount of income that you actually kept.

If you need more help, we need to know all of the following.

• What kind of income was overpaid to you?
• In what year did you receive the overpayment?
• Did you, or will you, report the overpaid amount as income on your tax return for the year that you received it?
• In what year did you, or will you, pay it back?
• What is the exact amount that you will pay back?

oops, I received overpayment on unemployment. do I report the amount I was overpaid or just the amount that’s on my 1099-G

You report the amount that's shown on your 1099-G.

If the 1099-G does not include the overpayment, then you will not report anything about paying it back. The amount that you are reporting as income has already been adjusted for the overpayment.

Hi - I had a similar question.  One of my 1099 clients overpaid an invoice in 2022.  I did not pay it back last year but am crediting their invoices in 2023 until it is paid.  Here are answers to one of replies to the similar question:

If you need more help, we need to know all of the following.

• What kind of income was overpaid to you? 

  Services provided by my company

• In what year did you receive the overpayment? 

  2022

• Did you, or will you, report the overpaid amount as income on your tax return for the year that you received it? 

  The client reported it on my 2022 1099.

• In what year did you, or will you, pay it back? 

  2023

• What is the exact amount that you will pay back? 

  $7,100.

If you are a cash basis tax payer you report it when you receive it.   I would include the overpayment in your 2022 tax return.  Then next year you report any paybacks as an expense.  But you are not paying it back to them.  You are crediting the invoices.  You don't report anything for it on 2023.  So you will just have less income in 2023 to be taxed on.  You only report your actual income when you actually get it.  Hope that isn't too confusing.  

Not at all - thank you for the reply!  I guess I was thinking that if someone overpaid a massive amount, and you had to report it as income, it could have devastating consequences in your tax liability and perhaps in other income-based areas.  Even paying it back the following year wouldn't erase all the potential damage.  But that's a hypothetical and you took the time to answer my actual question, so THANK YOU again!

-Mike